10-KPeriod: FY2011

STARBUCKS CORP Annual Report, Year Ended Oct 2, 2011

Filed November 18, 2011For Securities:SBUX

Summary

Starbucks Corporation's 2011 10-K report highlights a year of robust growth and improved profitability, driven by strong performance in its company-operated stores, particularly in the United States, and continued international expansion. The company demonstrated resilience despite headwinds from rising commodity costs, effectively leveraging increased sales and optimizing store-level economics to drive an 8% increase in global comparable store sales. This growth translated into higher operating income and a significant improvement in earnings per share (EPS) to $1.62. Key strategic initiatives included refining store operations through technology upgrades, expanding the food warming program into new markets like China, and successfully transitioning its consumer packaged goods business to a direct distribution model. The company also continued its disciplined approach to store growth, with a primary focus on international markets, while managing its capital effectively through share repurchases and dividend payments. Management expressed confidence in its business model and brand strength, setting a positive outlook for fiscal year 2012.

Financial Statements
Beta
Revenue$11.70B
Cost of Revenue$4.92B
Gross Profit$6.78B
Operating Expenses$10.18B
Operating Income$1.73B
Interest Expense$33.30M
Net Income$1.25B
EPS (Basic)$0.83
EPS (Diluted)$0.81
Shares Outstanding (Basic)1.50B
Shares Outstanding (Diluted)1.54B

Key Highlights

  • 1Consolidated net revenues increased by 9% to $11.7 billion, primarily driven by an 8% rise in global comparable store sales.
  • 2Operating income grew to $1.7 billion, with operating margin expanding to 14.8% from 13.3% in the prior year, despite higher commodity costs.
  • 3EPS rose to $1.62, up from $1.24 in the previous year, aided by improved sales leverage and certain one-time gains.
  • 4Company-operated stores generated 82.3% of total net revenues, with the US segment accounting for the majority of sales.
  • 5International net revenues increased by 15%, reflecting foreign currency translation benefits and a 5% rise in comparable store sales.
  • 6The company successfully transitioned its consumer packaged goods (CPG) distribution to a direct model, contributing to a 22% revenue increase in that segment.
  • 7Starbucks returned approximately $945 million to shareholders through share repurchases and dividends in fiscal 2011.

Frequently Asked Questions

Starbucks reported strong financial performance in fiscal year 2011, with a 9% increase in consolidated net revenues to $11.7 billion. This growth was driven by an 8% increase in global comparable store sales. Operating income increased to $1.7 billion, and earnings per share (EPS) rose to $1.62, reflecting improved sales leverage and operational efficiencies despite higher commodity costs.

The US segment, which represents the largest portion of revenue (69%), saw a 6% increase in total net revenues, primarily due to an 8% rise in comparable store sales. The International segment, contributing 22% of total net revenues, experienced a 15% revenue increase, boosted by favorable foreign currency translation and a 5% rise in comparable store sales.

Key strategic initiatives included refining store operations through technology upgrades, expanding the food warming program into markets like China, successfully transitioning the consumer packaged goods (CPG) business to a direct distribution model, and continuing disciplined global store expansion, with a focus on international markets. The company also returned capital to shareholders through share repurchases and dividends.

For fiscal year 2012, Starbucks anticipated moderate revenue growth, driven by mid-single-digit comparable store sales growth, new store openings, and strong performance in the CPG business. The company also projected modest improvements in consolidated operating margin and EPS, while planning for increased capital expenditures related to store renovations and manufacturing capacity.